Advertising And Social Networks - A Model
February 25, 2008 – 7:11 amA number of professors at the Cameron School of Business here were kind enough to donate some time to my dry-run before I present at UNCW’s Business Week this Tuesday. During the dry-run, an interesting conversation broke out on advertising on social networks that dealt with both sides of the coin (the advertiser and the social network receiving the advertising revenues). The discussion was spurred by Dr. Anderson on how companies can successfully advertise on/with social networks, and how social networks can return a profit from the advertisers with minimal frustration to its users.
Having put some additional thought into it, the theory what I kept coming back to is relationships. I also came across David Armano’s post today about the “3 U’s”. The two ideas, I feel, coincide quite well. Hopefully he doesn’t mind, but in this post I plan to merge the two, using his 3 U’s to reinforce my examples as the factors (or ‘metrics’) that drive the relationship. If you do happen to mind, Mr. Armano, then I suppose I can ask your forgiveness at the blogger social :)
As I see it, the relationship is the basis for whether or not an advertisers can successfully engage their ‘target’ (we’ll refer to ‘target’ as citizens) and whether or not a social network can generate revenue from the same ads (or if the ads become a burden and people leave).
Stated differently, the basis of the relationship is created by the brand (like MySpace) being engaged by its community and the health of the relationship (goodwill) that brand has with its community (users).
Now, to bring in David’s 3 U’s as the kind of ‘metrics’ of the relationship.
If it serves a purpose, it’s Useful.
If it fosters meaningful interactions, it has Utility.
If it facilitates connections and conversations, it creates Unity.
Let’s take a look at MySpace as the first example.
After MySpace reached a high user volume allowing proper scale for strong monetization, they began to really inundate their users with ads in a very negative way. As opposed to just providing text ads that may have been relevant to their community’s interests, they monetized everything they possibly could (including the background of the MySpace landing page). While the site was useful, it forfeited much of the goodwill that was created between the brand and its community by adding friction to its utility.
It’s at the point that the forfeiting of goodwill reaches a certain threshold where unity is significantly lowered (or infringed upon) that a shift to the latest thing (or the loss of users, revenues, etc) can occur. This was seen with Facebook’s gain in popularity vs. MySpace, and it was seen in MySpace taking the place of Friendster (in friendsters’ case their reduction in the health of their relationship was due to different reasons).
Facebook is a contrasting scenario where much emphasis has been placed on securing the health of their relationship with their community. Because of this, when they did implement ads initially, it would seem they were so conscientious that the ads were actually hardly effective at all. Instead of Facebook taking the MySpace approach (inundation), they worked toward keeping the relationship with their community healthy, or perhaps better stated, preserving possibly the strongest ‘metric’- unity. The result is a system whose advertising is a result of the users’ already occuring habits or actions, in this case creating an endorsement like system. That is, when I purchase an item on Amazon, I have the option to add it to my mini-feed as an update (notifying my friends of what I purchased and where). In this case, the goal of their system was to actually piggy back on Facebook’s existing utility (both inside and outside of facebook), generally leaving its usefulness untouched, and ideally improving their community’s unity.
That is to say, if MySpace had not decreased their sites utility and infringed on its unity, their relationship with the community may have been such that Facebook wouldn’t have looked like a friendlier alternative that adds value to their relationship.
While I have tried to make this solid, I wouldn’t say it’s complete. So please feel free to give your thoughts or suggestions, I love the discussion and will update appropriately from it.
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